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Imagine that you live in a country with a modern fiat currency (USD, EUR, YEN, GBP, etc.), and that you have just been bestowed with the ability to increase your bank account balance to any figure you please.

After getting over the initial high of your good fortune, you would probably get to work budgeting out your new life - a few billion should be sufficient.

But you would still limit yourself. Somehow, intuitively, even the financially ignorant would know that an astronomical figure such as 100 quadrillion US dollars would end up working against them. But why?

The answer is that this absurd example highlights a fundamental truth about monetary inflation: that at its core, in any degree, and regardless of whatever rationalization for it, that inflation is theft; direct theft from other holders of the currency.

Steal a little bit from everybody and you might get away with it, but steal too much, and you risk sabotaging faith in the currency you manipulate.

Equally important to this point is that you boost your bank account first, before anybody else. It stands to reason that your plot is best deployed in obscurity, benefiting from the temporarily low prices of everyday goods and services before your new currency circulates enough to make a difference. Getting new money first is key.

So who gets new currency first?

Modern currencies are elastic, meaning that they can increase or decrease in number through the credit process: when money is borrowed from banks, the supply increases, and when the debt is repaid, the supply decreases. Whether the money is borrowed by private companies, individuals, or the government, it is these entities, on purpose or inadvertently, who get and spend the currency first.

This illustrates that fiat currency creates winners and losers by its own nature, and with its continuous expansion and contraction of supply, a fiat currency is not unlike a continuously self-ingesting snake.

The myth of macroeconomic objectives

In the United States, the currency supply is indirectly controlled by the central bank, known as the Federal Reserve. Tasked with tending to the self-ingesiting snake that is the US dollar, armed with the equivalent of syringes full of growth hormones and blood-letting phlebotomy tools, the Fed has a dual mandate: To engender price stability, and maximum employment.

On the surface, these goals seem honorable or, at least, reasonable. Putting aside for the moment that the two can be in direct opposition to one another, let's take another perspective for why these might not be the best choices for a dual mandate.

First, price stability in a growing economy equals systemic theft from laborers. More specifically, if you earn a wage or a salary for a living (laborer), and you become more productive over time (growing economy), your hard earned cash should buy more stuff - milk, gas, whatever. An advance in production should manifest itself in cheaper goods. However, this is against the Fed's first mandate. Through inflation, price stability can be achieved, and so the efficiency of the worker is lost to him or her, and passed on to the aforementioned individuals and institutions that borrow from banks.

Second, employment is really only superficially desirable because it is so entwined with money and lifestyle. Unemployment, or rather, deliberate "retired" unemployment, is a nobler and fairer objective than full employment. Why work for work's sake? Most people work so that they can enjoy the time they spend not working, which ideally would be 100%. A productive economy, coupled with individual thrift, should result in more and more leisure time, not an abundance of employment. An economy in which so many people need to work so much of the time might even be considered a failure to its own ends.

In favor of a stable currency supply

Indeed, a fair bit of our daily lives are influenced not just by money, but by the type of money that we use. Elastic currency is a fascinating concept, and worthy of advanced study and theorization, even more so because we live in a world where all government-backed currencies are elastic, and it affects us greatly.

There are also reasons that we may choose to reject the design of elastic fiat currency, in particular because it can become unstable in certain circumstances (think of the snake eating itself unusually rapaciously), leading to much financial harm. A second reason to reject it would be its tendency to obscure bad investments for a prolonged period, after which their resolution becomes more problematic and painful. And yet a third would be its corruptibility, that human hands on the money levers will always be pressured and tempted by outside influences.

A currency with a (relatively) stable supply such as bitcoin does away with many of these issues. True, living in a Bitcoin world would take some getting used to, since the purchasing power of Bitcoin would dynamically adjust to economic conditions, perhaps sometimes violently. But net, keeping with the tradition of nipping problems when they are budding as opposed to once they have bloomed, removing the dams from the monetary Nile brings back the annual flooding, but does away with the 50-year deluge.

Let's wish our friend Bitcoin, the honey badger, good luck against the snake.